Q: I'm 55 years old and currently I max out my 401(k) contribution, including the catch-up. I'm curious if I should reduce my contribution and increase my mortgage payment. What makes sense?

A: You can address this question in one of two ways: reviewing it strictly by the numbers or using a lifestyle approach.

Looking at this Using numbers alone, you should consider the amount of your expected return from your 401(k) vs. the amount you are paying for your mortgage.

So, if you are expecting to earn 7% to 8% on your 401(k) investments, but you are only paying around 4% on your mortgage, in the long run, you may be better off continuing to contribute to your 401(k) because the money will be working in your favor. And the pre-tax retirement contribution you make will help provide a higher return on your investment.

And you are borrowing money even more cheaply if the rate you are paying on your mortgage is effectively lower than the interest rate due to the potential tax deduction, (assuming you are itemizing your deductions).

For example, with a 4% interest rate, your net borrowing cost could be about 3% after factoring in your home-mortgage interest tax deduction if you're in the 25% tax bracket. However, if your mortgage is mostly paid off, you are probably paying little or no interest and so you're not benefiting from the tax deduction.

If your mortgage rate is over 4% and it is an adjustable rate mortgage you could consider refinancing it rather than paying it off. But that will depend on your credit score and any other debt you have.

Putting the numbers aside and looking at this in terms of lifestyle, I would ask if you have done an analysis to determine whether you are on track to reach your goals, such as being able to retire comfortably. If you have been saving enough to reach your goals, then you may be able to afford to pay down your mortgage.

If not, then you should continue to direct money to your 401(k). You also should address your intent for your house. Will you sell it when you retire and relocate? This may have a bearing on your mortgage decision.

Another consideration is one of a subjective nature. In my experience, I have spoken to individuals who simply do not want the burden of debt, even the so-called "good debt" of a mortgage. It is good debt because of the potential tax deduction and it is debt on a potential appreciating asset.

If this is the case, then all of the points I have asked you to consider above may be moot and you should simply pay down debt. But make sure that by lowering your 401(k) contribution you do not miss out on any employer matching contribution.

I would hope you consider the lifestyle approach, because reviewing your entire financial picture may give you peace of mind so you are able to make an informed decision once all of the options are considered.